Standard Deduction vs. Itemized Deduction
As you complete your tax return on efile.com you will be asked on whether to itemize deductions or to use the standard deduction. Before you start please familiarize yourself with the basics.
Standard deduction is a dollar amount that reduces the amount of income on which you are taxed. Please be aware that you can not claim the standard deduction if you claim itemized deductions.
In general, the basic standard deduction is an amount relative to each tax year and varies according to your filing status. The standard deduction of an individual who can be claimed as a dependent on another person's tax return is the greater of: An amount specified by law, or the individual's earned income plus a specified amount up to the basic standard deduction for his or her filing status.
You should itemize deductions if your allowable itemized deductions are more than your standard deduction. Some taxpayers must itemize deductions because they do not qualify for the standard deduction.
Those taxpayers not eligible to use the standard deduction include nonresident aliens, dual–status aliens, and individuals who file returns for periods of less than 12 months. When a married couple files separate returns and one spouse itemizes deductions, the other spouse must also itemize deductions. For additional information, refer to Publication 501, Exemptions, Standard Deduction, and Filing Information.
Itemized deductions are certain expenses that you can use to lower your taxes:
- Medical and dental expenses
- State and local income taxes, or sales tax
- Real estate and personal property taxes
- Home mortgage and investment interest
- Charitable contributions
- Casualty and theft losses
- Job expenses, and
- Miscellaneous deductions
You may be subject to a limit on some of your itemized deductions based on your adjusted gross income.
This limit applies to all itemized deductions except medical and dental expenses, casualty and theft losses, gambling losses, and investment interest.
In some cases, your standard deduction can consist of two parts, the basic standard deduction and additional standard deduction amounts, for age, or blindness, or both. The additional amount is an amount specified by law and varies based on your filing status. If you file a separate return and can claim an exemption for your spouse, you will be allowed any additional amounts that apply to you or your spouse.
The additional amount for age will be allowed if you are age 65 or older at the end of the tax year. You are considered to be 65 on the day before your 65th birthday.
The additional amount for blindness will be allowed if you are blind on the last day of the tax year.
For example, a single taxpayer who is age 65 and legally blind would be entitled to a basic standard deduction and an additional standard deduction.
If you or your spouse were 65 or older or blind at the end of the year, be sure to claim the additional standard deduction amounts by checking the appropriate boxes on the online efile.com tax preparation software.
Certain individuals are not entitled to the standard deduction. They are:
- A married individual filing a separate return whose spouse itemizes deductions
- An individual who was a nonresident alien or dual status alien during any part of the year
- An individual who files a return for a period of less than 12 months due to a change in his or her annual accounting cycle
